What is Starbucks' cost of selling its China business
1min read 21st Century Business reporter He Hongyuan reports from Beijing
Original Starbucks, drink it with care. Because Starbucks' operating model in China may change.
Hello, I'm Xiaohua. Welcome to watch this issue of Consumer Reference.
On November 21, according to media reports, Starbucks is exploring options for its China business, including the possibility of selling equity. The key is that the company did not directly deny this rumor. "We are actively seeking the best growth path, including exploring strategic partnerships," said a global spokesperson for the company. Notice that this question seems to have no right to speak for Starbucks China.
What's behind it? Starbucks is facing performance pressure in China.
In Q3, Starbucks China's revenue was US$783.7 million (about Rmb5.576 billion), down 7% YoY. Luckin was Rmb10.181 billion. In addition, same-store sales fell 14%, transaction volume and average transaction value fell 6% and 8%, respectively. This is based on the growth of Starbucks' stores in China to 7,596.
Why?
China's market has indeed changed, and consumers are more cost-effective. Kuka has launched a price war of 9.9 yuan, and its growth has been rapid. Even Luckin's self-operated stores saw a 13.1% YoY decline in same-store sales.
Moreover, due to China's supply chain advantages, Luckin, Kuka and Starbucks have a much smaller product gap than price gap. According to home delivery and catering eye data, Starbucks' average transaction value in China is Rmb37.53, while Luckin's is Rmb14.98.
So, is it a good business for Starbucks to sell equity in its China business?
Of course, it depends on the price. We don't know yet. Let's talk about strategy.
On the one hand, selling the China business will indeed bring Starbucks a sum of money and relieve growth pressure. New CEO Brian Niccol is not satisfied with Starbucks' operations in the US market, and the US is also declining. It can be focused on the US market.
At the same time, China's capital operation is not necessarily bad. Like McDonald's, Domino's Pizza and Subway, they are all operated by Chinese teams.
But Starbucks is different in that it is a company with faith. If it changes its operating party, will its culture still exist? Once in a winter, a Starbucks employee drew a picture for me and asked me to take care of my health. This feeling is very good.
Between ideal and reality, Starbucks needs to make a decision.